Dec 08, 2011 | Comments 3
Singaporeans, permanent residents, and foreigners will be paying an Additional Buyers’ Stamp Duty (ABSD) between three and 10 per cent for residential properties, effective immediately, the government announced Thursday.
The announcement comes as residential property prices continue to rise in Singapore, reaching 13 per cent above the peak in 1996 and 16 percent above a more recent peak in 2008, and the government struggles to control a runaway housing market.
The goal of the ABPD is “to promote a sustainable residential property market where prices move in line with economic fundamentals,” the Ministry of National Development said in a statement.
This is the government’s harshest attempt yet at cooling the housing market. Purchases by foreigners, who accounted for 19 per cent of private residential purchases in the second half of 2011, up from only seven per cent in the the first half of 2009, will pay a 10 per cent ABSD. Corporations will also be subject to that rate. Permanent residents already owning one residential property and Singaporeans already owning two residential properties will be subject to a three per cent ABSD.
Property Report noted in October that the private residential market in Singapore has remained strong through Q3.
“Given the uncertainty in stock markets and with interest rates remaining low, private property in Singapore continues to attract investors, local and foreign,” the Ministry said. Excessive investment demand will however make the property cycle more volatile, and thus increase the risks to our economy and banking system.”
Immediate reaction to the news was mixed.
“It probably wouldn’t have an effect in the short-term, because the property market prices are still rising, people are still speculating,” one Singaporean told Channel News Asia. On the other hand, an Indian living in Singapore told CNA, “I know there is a stamp duty, but any increase in that will probably take it out of my level where I want to buy.”
The ABDS will be applied over and above a current, more modest Buyers’ Stamp Duty.
For additional details on the ABSD, including specific regulations, click here.